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Greek PM summoned to Brussels for debt deal talks

Wed, Jun 24, 2015 - 4:54 PM

Greek Prime Minister Alexis Tsipras was summoned to Brussels for a decisive meeting with key EU-IMF creditors Wednesday as eurozone finance ministers try to finalise a debt deal and avoid a default by Athens.

PHOTO: AFP

[BRUSSELS] Greek Prime Minister Alexis Tsipras was summoned to Brussels for a decisive meeting with key EU-IMF creditors Wednesday as eurozone finance ministers try to finalise a debt deal and avoid a default by Athens.

The Tsipras talks showed gaps remain between the two sides, while the Greek premier must also convince his anti-austerity Syriza party to approve concessions needed to unblock desperately needed bailout funds.

But hopes of a deal to end five months of deadlock and keep Greece from crashing out of the euro still spurred global stocks, with Asian stocks rising for a third straight day and Tokyo hitting a more than 18-year high.

Greek Finance Minister Yanis Varoufakis said his country was in the "final stretch" of negotiations with creditors and could reach agreement shortly.

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Mr Tsipras was summoned back to Brussels for the second time in a week and the day before an EU leaders' summit to meet the key players from Greece's bailout monitors: European Commission President Jean-Claude Juncker, International Monetary Fund chief Christine Lagarde and European Central Bank boss Mario Draghi.

"The mood is difficult - why do you think the big bosses are coming here?" a diplomatic source told AFP of the Tsipras talks on Wednesday which are due to start around 1000 GMT.

Officials said the idea was to make a final examination of the 11th hour reform offer Greece submitted to its creditors on Sunday, ahead of the meeting of the Eurogroup of finance ministers from the 19-country single currency area which starts at 1700 GMT.

The aim is then to get the decision rubber-stamped by EU leaders who meet for a summit in Brussels on Thursday and Friday.

Another source said the mood on Wednesday was "positive, realistic and determined to come to the right conclusion." Greece needs to unlock the last 7.2 billion euros of its EU-IMF bailout before it expires on June 30 in order to meet a 1.5-billion-euro IMF loan repayment due on the same day, or risk defaulting.

The new proposals by Athens aim to raise eight billion euros, mostly through new taxes on the wealthy and businesses, VAT increases and a cut in defence spending.

Radical leftist leader Mr Tsipras was elected in January on the back of a promise to end five years of painful austerity imposed by two huge EU-IMF bailouts, during which time Greece's economy has collapsed and unemployment has soared.

"We are very near (an agreement), the next 48 hours will be decisive," Greek government spokesman Gabriel Sakellaridis said Tuesday.

EU officials including Juncker and economic affairs commissioner Pierre Moscovici have also said they are "convinced" an accord is close but that work remained to be done on pensions and VAT - key sticking points for Greece.

The return of 23 per cent VAT on the restaurant sector - up from the current 13 per cent - has already been described as "the kiss of death" by the head of an association of restaurant chains, Thanassis Papanikolaou.

Any deal will also need to deal with what comes next, with EU officials suggesting an extension of the bailout until the end of the year followed by a possible third bailout.

The IMF and Germany, Europe's biggest economy, are seen as being the most sceptical about the Greek proposals. Berlin is particularly keen to avoid any mention of debt relief in a deal.

The Greek government meanwhile warned that any accord would have to be approved by a parliamentary majority before June 30, a tough task for Mr Tsipras as many on the left wing of his party view him as reneging on campaign promises.

"If the agreement is not approved by the deputies of the governmental majority, the government cannot remain in place," Mr Sakellaridis said.

Thousands of protesters answered a call by unions close to Greece's communist party, turning out in central Athens Tuesday night to challenge the reforms.

Growing fears of a bank run in Greece amid a huge outflow in deposits again prompted the European Central Bank on Tuesday to inject more emergency funding to cover withdrawals.

Meanwhile documents published online by WikiLeaks Thursday showed that French president Francois Hollande had approved secret meetings as early as 2012 on the consequences of a Greek exit from the eurozone.

The Greek crisis will not go away even if there is a deal as the two bailouts worth 240 billion euros since the crisis erupted in 2010 have left it with debt totalling nearly 180 percent of its annual economic output.